Find Greatest Energy Savings in Power Production Industry

By Tom Casten

April 22, 2008

Let’s assume, as I do, that global warming is real and human activity is contributing to it. Where does responsibility lie? Conventional wisdom lays blame squarely at the feet of the auto industry. Politicians and pundits point to gas-guzzling SUVs and say we need to discourage driving and increase gas mileage standards.
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This argument has a kernel of truth, but misses the big picture. Cars and light trucks account for just 19% of America’s greenhouse pollution. Meanwhile, the production of power and heat accounts for a whopping 69%.

If we want to curb climate change, we can’t just scapegoat the already embattled auto industry. Instead, we must confront the elephant in the room: a grossly inefficient energy system that’s polluting our skies and jeopardizing our children’s futures. We must change the way we produce power.

A typical power plant is only about 33% efficient, burning three units of fuel to generate just one unit of power. Most of the waste comes in the form of excess heat that’s vented into the atmosphere. Even more energy is wasted by manufacturing that generates immense amounts of excess heat.

All this waste means higher pollution and energy costs. But there is a better way: recycling waste energy — capturing heat that’s normally wasted and turning it into clean electricity and steam, producing more power while using less fossil fuel. Manufacturers and power plants that recycle energy tend to double their energy efficiency, simultaneously reducing costs and greenhouse pollution.

In fact, recent studies done for the U.S. EPA and Department of Energy suggest energy recycling could provide enough clean power to replace nearly 400 coal plants and reduce greenhouse emissions by about 20%. The World Alliance for Distributed Energy estimates this could cut U.S. energy costs by $70 billion annually. Energy recycling could do more to reduce global warming than taking every single car off the road.

With energy recycling, electricity would cost less. The air would be cleaner. In Detroit, jobs would be more secure, since the auto industry would be under less pressure to do the heavy lifting on climate change.

Indeed, if automakers recycled waste energy themselves, the industry could cut costs and become more competitive in the global marketplace.

Other countries are way ahead when it comes to energy recycling. Denmark, for example, generates more than half its power this way. But the U.S. recycling rate languishes in the single digits. Denmark uses only 40% as much energy to produce one dollar of GDP.

So why isn’t more being done in America? The answer is simple: outdated regulations.

Back in the 1930s, local utilities were granted a monopoly over electricity production. The government protected utilities from competition to encourage them to electrify the countryside. That strategy worked. But today, utilities continue to be guaranteed a profit no matter how inefficient they are.

The result? Our energy system is no more efficient than in the 1950s. If anyone steps in with a better way, there’s usually a regulation blocking it.

In every state, for instance, it’s illegal for anyone other than the local utility to run an electric wire across a public street. This rule effectively prevents energy recyclers from selling power to neighboring buildings.

Perverse regulations like these make it hard for energy recyclers to compete. While the House Energy Committee last year recognized opportunities associated with industrial efficiency, far more needs to be done on both the federal and state levels. State governments could loosen the utilities’ monopoly protections and require more efficient alternatives. Regulators could ease restrictions on private wires. The federal government could stop voiding operating permits of power plants that invest in improved efficiency

The convenient truth is we can simultaneously spur the economy and reduce global warming. But first, we must shift some attention from the auto industry to our energy system — a system that’s inefficient, inadequate and, ultimately, indefensible.